The Reserve Bank of Australia (RBA) and its governor Philip Lowe have been accused of being overoptimistic in recent commentary, but today’s better-than-expected Chinese data and the bullish AUD/USD chart suggest otherwise.

Chinese data showed a 16.7% rise in imports in January which will help assuage fears the Chinese hunger for Australian raw materials is waning, and the daily AUD/USD chart is showing a bullish pennant or triangle consolidation pattern which suggests resolution in a final break higher.

“AUD/USD is still consolidating as traders take profit after the surge higher to 0.7700. Hourly resistance is given at 0.7696 and stronger resistance can be found at 0.7835. Expect to see renewed bullish pressures,” said a report on the pair’s technical situation from Swissquote’s strategist Yann Quelenn.

The consolidation which has formed looks distinctly like a triangle or pennant bullish continuation pattern.

The pattern suggests a breakout higher may be followed by more upside thereafter.

Commerzbank’s Karen Jones says, “AUD is simply consolidating…”

And whilst she says an Elliot wave analysis (using cycle theory) indicates a probable small retracement initially, to 0.7490-0.7570, bullish pressures may take over thereafter.

“Last week, the market eroded the 2013-2017 downtrend and cleared the .7645 Fibo resistance and in doing so has introduced scope to the .7778/.7850 2016 highs,” said Commerzbank’s Jones.

We see a high chance of a breakout higher, although would seek confirmation first from a break above the 0.7696 highs.

Such a break, however, would be expected to move up to a target at -0.7778 and the November 2016 highs.